URGENT PLEASE! Financial Markets and Financial Institutions: Answer the following WITH NO PLAGIAR.

Question 16

As a consultant, you have been asked to assess a bank's sources and uses of funds, and to offer recommendations on how it can restructure its sources and uses of funds to improve its performance. This bank has traditionally focused on attracting funds by offering certificates of deposit (CDs). It offers checking accounts and money market deposit accounts (MMDAs), but it has not advertised these accounts because it has obtained an adequate amount of funds from the CDs. It pays about 3 percentage points more on its CDs than on its money market deposit accounts, but the bank prefers knowing the precise length of time that it can use the deposited funds. (The CDs have a specified maturity whereas the MMDAs do not.) The bank's cost of funds has historically been higher than that of most banks, but it has not been concerned because its earnings have been relatively high. The bank's use of funds has historically been focused on local real estate loans to build shopping malls and apartment complexes. The real estate loans have provided a very high return over the last several years. However, the demand for real estate in the local area has slowed.

• a. Should the bank continue to focus on attracting funds by offering CDs, or should it push its other types of deposits? NO PLAGIAR.
• b. Should the bank continue to focus on real estate loans? If the bank reduces its real estate loans, where should the funds be allocated? NO PLAGIAR.